Bank Reconciliation Statement: Guide + 25 Examples
Bank Reconciliation Statement: Complete Guide with 50+ Solved Examples (2026)
By Vicky Sarin, CA | 25 Years Post-Qualification Experience | INSEAD ILPSE Alumni
Introduction: Why I Still Remember My First Bank Reconciliation Nightmare
It was 1996, and I was three months into my articleship at a mid-sized chartered accountancy firm in Chennai. My principal handed me a stack of bank statements and a cash book with the words, "Reconcile this. The difference is ₹47,832. Find it."
Three days later—yes, three full days—I found it. A transposition error: ₹23,874 had been recorded as ₹23,784. A mere flip of two digits had consumed 72 hours of my life.
That experience taught me something invaluable: bank reconciliation isn't just about matching numbers. It's about developing a systematic approach that prevents you from drowning in a sea of transactions.
Twenty-five years and thousands of reconciliations later, I've distilled everything I know into this guide. Whether you're a commerce student preparing for exams, an accounting professional brushing up on fundamentals, or a business owner trying to understand your finances better, this comprehensive resource will transform how you approach bank reconciliation.
What is a Bank Reconciliation Statement?
A Bank Reconciliation Statement (BRS) is a document that explains the difference between the bank balance shown in an organization's cash book and the balance shown in the bank's passbook or statement on a specific date.
Think of it this way: your cash book is your version of the story. The bank statement is the bank's version. A BRS is the conversation that explains why these two storytellers sometimes disagree.
The Simple Definition
Bank Reconciliation Statement = A systematic comparison between your records (cash book) and the bank's records (passbook) to identify and explain differences.
Why Do These Differences Exist?
The cash book and bank statement are maintained by two different parties:
- Cash Book: Maintained by you (or your accountant)
- Bank Statement/Passbook: Maintained by the bank
Both record the same transactions, but often at different times or with different interpretations. This timing gap and occasional errors create discrepancies that the BRS resolves.
If you're new to accounting terminology, I recommend checking out our Accounting Terms A-Z Dictionary for quick definitions of terms like debit, credit, and ledger.
Why is Bank Reconciliation Statement Prepared?
In my 25 years of practice, I've seen bank reconciliation save businesses from everything from minor embarrassments to major frauds. Here's why it matters:
1. Detecting Errors
Both you and the bank can make mistakes. Transposition errors (writing ₹5,643 as ₹5,463), omissions, and duplications happen more often than you'd think.
Real example from my practice: A manufacturing client discovered through BRS that their bank had credited ₹2,50,000 to their account that belonged to another customer with a similar account number. Without reconciliation, they might have spent money that wasn't theirs.
Bank reconciliation helps detect many accounting errors. For a complete list of error types and how to fix them, see our types of errors in accounting guide
2. Identifying Unauthorized Transactions
Bank reconciliation is your first line of defense against fraud. Unauthorized withdrawals, forged cheques, and embezzlement often surface during this process.
For those interested in fraud detection, the AICPA Forensic Accounting Certificate covers these investigative techniques in depth.
3. Tracking Outstanding Items
Cheques issued but not yet presented, deposits in transit, and pending clearances all affect your actual available balance. BRS gives you the true picture.
4. Maintaining Accurate Financial Records
For businesses preparing for audits or seeking loans, accurate bank balances are non-negotiable. Lenders and auditors willcheck.
5. Cash Flow Management
Understanding the difference between your "book balance" and "actual available balance" prevents embarrassing situations like bounced cheques.
Who Prepares the Bank Reconciliation Statement?
The BRS is always prepared by the account holder—the business, organization, or individual whose bank account is being reconciled.
The bank does not prepare this statement. The bank simply provides you with the passbook or statement; reconciling it with your records is your responsibility.
In most organizations:
- Small businesses: The owner or bookkeeper
- Medium enterprises: The accounts department
- Large corporations: Internal audit team or dedicated reconciliation staff
Aspiring accountants preparing for professional certifications like CA, CPA, or CMA will find bank reconciliation a fundamental topic in their syllabi.
Causes of Difference Between Cash Book and Passbook
Understanding why differences occur is half the battle. Here are the nine most common causes I've encountered:
Category 1: Timing Differences
1. Cheques Issued But Not Yet Presented for Payment
You issue a cheque to a supplier on January 25. You immediately record it in your cash book (crediting bank). But the supplier deposits it on February 2, and it clears on February 4.
Result: On January 31, your cash book shows a lower balance than the bank statement.
2. Cheques Deposited But Not Yet Credited (Cheques in Collection)
You deposit a customer's cheque on January 28. You debit your bank column immediately. But the cheque clears on February 1.
Result: On January 31, your cash book shows a higher balance than the bank statement.
3. Direct Deposits by Third Parties
A customer pays directly into your bank account via NEFT/RTGS/IMPS. The bank credits your account instantly, but you only learn about it when you check the statement.
Result: Bank statement shows a higher balance than your cash book.
Category 2: Bank Charges and Credits
4. Bank Charges and Fees
The bank deducts service charges, SMS alert fees, or minimum balance penalties. These are debited automatically, but you only record them after seeing the statement.
Result: Bank statement shows a lower balance than your cash book.
5. Interest Credited by Bank
Savings accounts earn interest that the bank credits directly. You record it only after seeing the statement.
Result: Bank statement shows a higher balance than your cash book.
6. Interest or Penalties Charged by Bank
Overdraft interest, loan EMIs, or penalty charges get debited by the bank.
Result: Bank statement shows a lower balance than your cash book.
Category 3: Direct Debits and Credits
7. Direct Payments Made by Bank (Standing Instructions)
Insurance premiums, SIP investments, or loan EMIs paid through standing instructions are debited by the bank automatically.
Result: Bank statement shows a lower balance than your cash book (until you record the entries).
8. Dividend or Interest Collected by Bank
Banks often collect dividends on shares or interest on fixed deposits held in demat accounts and credit them directly.
Result: Bank statement shows a higher balance than your cash book.
Category 4: Errors
9. Errors in Cash Book or Bank Statement
- Cash book errors: Wrong amounts, wrong dates, omitted entries
- Bank errors: Credits/debits to wrong accounts, incorrect amounts
These need immediate attention and correction.
Bank Reconciliation Statement Format
There are two primary methods for preparing a BRS:
Method 1: Starting with Cash Book Balance
Particulars Amount (₹)
-------------------------------------------------------------------
Balance as per Cash Book XX,XXX
Add:
- Cheques issued but not presented X,XXX
- Direct credits by bank (interest, dividends) X,XXX
- Errors in cash book (undercast of deposits) X,XXX
--------
XX,XXX
Less:
- Cheques deposited but not credited X,XXX
- Bank charges not recorded in cash book X,XXX
- Direct debits by bank (EMIs, standing orders) X,XXX
- Errors in cash book (overcast of deposits) X,XXX
--------
Balance as per Bank Statement XX,XXX
==================================================================
Method 2: Starting with Bank Statement Balance
Particulars Amount (₹)
-------------------------------------------------------------------
Balance as per Bank Statement XX,XXX
Add:
- Cheques deposited but not credited X,XXX
- Bank charges not recorded in cash book X,XXX
- Direct debits by bank X,XXX
--------
XX,XXX
Less:
- Cheques issued but not presented X,XXX
- Direct credits by bank X,XXX
--------
Balance as per Cash Book XX,XXX
===================================================================
Understanding journal entries is essential for recording BRS adjustments. Our Journal Entries Guide with 100+ Examples provides detailed explanations of every entry type.
BRS Basic Examples (1-10): Single Adjustment Items
Example 1: Cheque Issued Not Presented
Given: Cash book shows a debit balance of ₹45,000. A cheque for ₹8,000 issued to a supplier has not yet been presented.
Balance as per Cash Book 45,000
Add: Cheque issued but not presented 8,000
--------
Balance as per Bank Statement 53,000
Explanation: When you issue a cheque, you immediately credit your bank column (reducing balance). But the bank hasn't debited it yet because the supplier hasn't deposited it. So the bank shows ₹8,000 more.
Example 2: Cheque Deposited Not Credited
Given: Cash book shows a debit balance of ₹62,000. A cheque for ₹12,000 deposited on January 30 was credited by bank on February 2.
Solution:
Balance as per Cash Book 62,000
Less: Cheque deposited but not credited 12,000
--------
Balance as per Bank Statement 50,000
Example 3: Bank Charges Not Recorded
Given: Cash book shows ₹35,500. Bank charges of ₹500 appear in passbook but not in cash book.
Balance as per Cash Book 35,500
Less: Bank charges not recorded 500
--------
Balance as per Bank Statement 35,000
Example 4: Interest Credited by Bank
Given: Cash book balance is ₹28,000. Bank has credited interest of ₹1,200 not yet recorded in cash book.
Solution:
Balance as per Cash Book 28,000
Add: Interest credited by bank 1,200
--------
Balance as per Bank Statement 29,200
Example 5: Direct Deposit by Customer
Given: Cash book shows ₹75,000. A customer deposited ₹15,000 directly via NEFT, not recorded in cash book.
Solution:
Balance as per Cash Book 75,000
Add: Direct deposit by customer (NEFT) 15,000
--------
Balance as per Bank Statement 90,000
Example 6: Standing Instruction for Insurance
Given: Cash book shows ₹42,000. Bank paid insurance premium of ₹6,000 via standing instruction.
Solution:
Balance as per Cash Book 42,000
Less: Insurance paid by bank (standing instruction) 6,000
--------
Balance as per Bank Statement 36,000
Example 7: Dividend Collected by Bank
Given: Cash book balance is ₹55,000. Bank collected dividend of ₹3,500 on shares.
Solution:
Balance as per Cash Book 55,000
Add: Dividend collected by bank 3,500
--------
Balance as per Bank Statement 58,500
Example 8: Cheque Dishonoured
Given: Cash book shows ₹48,000. A cheque for ₹7,000 deposited was returned dishonoured, not recorded in cash book.
Solution:
Balance as per Cash Book 48,000
Less: Cheque dishonoured (returned unpaid) 7,000
--------
Balance as per Bank Statement 41,000
Example 9: Wrong Credit by Bank
Given: Cash book shows ₹32,000. Bank has wrongly credited ₹4,000 meant for another customer.
Solution:
Balance as per Cash Book 32,000
Add: Wrong credit by bank (bank's error) 4,000
--------
Balance as per Bank Statement 36,000
Note: This is a bank error. Report it immediately; this isn't your money!
Example 10: Wrong Debit by Bank
Given: Cash book shows ₹67,000. Bank wrongly debited ₹5,000 that belonged to another account.
Solution:
Balance as per Cash Book 67,000
Less: Wrong debit by bank (bank's error) 5,000
--------
Balance as per Bank Statement 62,000
Intermediate Examples (11-15): Multiple Adjustments
Example 11: Comprehensive BRS
Given:
- Balance as per Cash Book 85,000
Add:
Cheques issued not presented 12,000
Interest credited by bank 1,500
--------
98,500
Less:
Cheques deposited not credited 8,000
Bank charges not recorded 350
--------
Balance as per Bank Statement 90,150
Example 12: Starting from Bank Statement Balance
Given:
- Bank statement shows credit balance of ₹1,25,000
- Cheques issued not presented: ₹18,000
- Cheques deposited not credited: ₹22,000
- Direct deposit by customer: ₹10,000 (not in cash book)
Solution:
Balance as per Bank Statement 1,25,000
Add:
Cheques deposited not credited 22,000
--------
1,47,000
Less:
Cheques issued not presented 18,000
Direct deposit by customer 10,000
--------
Balance as per Cash Book 1,19,000
Example 13: Overdraft in Cash Book
Given:
- Cash book shows overdraft (credit balance) of ₹15,000
- Cheques issued not presented: ₹6,000
- Bank charges: ₹800
Solution:
Overdraft as per Cash Book (15,000)
Less: Cheques issued not presented 6,000
Add: Bank charges not recorded 800
--------
Overdraft as per Bank Statement (21,800)
Note: When starting with overdraft, logic reverses. Unpresented cheques increase overdraft in bank books.
Example 14: Mixed Scenario with Interest and Charges
Given:
- Cash book balance: ₹72,400 (Dr)
- Cheques issued not presented: ₹14,200
- Cheques deposited not credited: ₹9,800
- Bank charges: ₹600
- Interest credited: ₹2,400
- Insurance premium paid by bank: ₹4,000
Solution:
Balance as per Cash Book 72,400
Add:
Cheques issued not presented 14,200
Interest credited by bank 2,400
--------
89,000
Less:
Cheques deposited not credited 9,800
Bank charges 600
Insurance premium paid by bank 4,000
--------
Balance as per Bank Statement 74,600
Example 15: Dishonoured Cheque with Multiple Items
Given:
- Cash book balance: ₹56,000 (Dr)
- Cheque deposited but dishonoured: ₹8,000 (not recorded)
- Direct deposit via RTGS: ₹25,000 (not recorded)
- Cheques issued not presented: ₹11,000
Solution:
Balance as per Cash Book 56,000
Add:
Cheques issued not presented 11,000
Direct deposit via RTGS 25,000
--------
92,000
Less:
Cheque dishonoured 8,000
--------
Balance as per Bank Statement 84,000
Advanced Examples (16-22): Complex Real-World Scenarios
Example 16: Bill Discounted and Dishonoured
Given:
- Cash book balance: ₹1,45,000
- A bill for ₹30,000 discounted with bank was dishonoured. Noting charges ₹500. (Not recorded in cash book)
- Cheques issued not presented: ₹22,000
Solution:
Balance as per Cash Book 1,45,000
Add:
Cheques issued not presented 22,000
--------
1,67,000
Less:
Bill dishonoured 30,000
Noting charges 500
--------
Balance as per Bank Statement 1,36,500
Example 17: Error in Recording Cheque Amount
Given:
- Cash book balance: ₹48,500
- A cheque for ₹7,650 was recorded in cash book as ₹7,560
- Bank charges: ₹250
Solution:
The error means ₹90 less was recorded (7,650 - 7,560 = 90). If it was a cheque deposited, cash book is understated by ₹90.
Balance as per Cash Book 48,500
Add:
Error in recording cheque (understatement) 90
--------
48,590
Less:
Bank charges 250
--------
Balance as per Bank Statement 48,340
Example 18: Transposition Error
Given:
- Cash book shows ₹63,450
- A deposit of ₹5,890 was recorded as ₹5,980 (transposition error)
- Cheques issued not presented: ₹7,200
Solution:
Transposition error: Recorded ₹90 more than actual (5,980 - 5,890 = 90)
Balance as per Cash Book 63,450
Add:
Cheques issued not presented 7,200
--------
70,650
Less:
Transposition error (overstatement) 90
--------
Balance as per Bank Statement 70,560
Example 19: Comprehensive Year-End BRS
Given:
- Cash book balance on 31st March: ₹2,85,000 (Dr)
- Cheques issued but not presented: ₹45,000
- Cheques deposited but not cleared: ₹38,000
- Bank charges for March: ₹1,200
- Interest on FD collected by bank: ₹12,500
- Quarterly insurance premium: ₹9,000 (standing instruction)
- Customer's cheque returned dishonoured: ₹15,000
- Direct NEFT receipt from customer: ₹50,000
Solution:
Balance as per Cash Book 2,85,000
Add:
Cheques issued not presented 45,000
Interest on FD collected 12,500
Direct NEFT receipt 50,000
--------
3,92,500
Less:
Cheques deposited not cleared 38,000
Bank charges 1,200
Insurance premium (standing instruction) 9,000
Cheque dishonoured 15,000
--------
Balance as per Bank Statement 3,29,300
This type of comprehensive reconciliation is essential for professionals pursuing CPA certification, where such practical problems regularly appear in examinations.
Example 20: BRS with Adjusted Cash Book
Sometimes you need to first adjust the cash book before preparing BRS. Items that require cash book adjustment:
- Bank charges (not yet recorded)
- Interest credited (not yet recorded)
- Direct deposits (not yet recorded)
- Dishonoured cheques (not yet recorded)
Given:
- Cash book balance: ₹95,000
- Bank charges: ₹400
- Interest credited: ₹1,800
- Customer direct deposit: ₹20,000
- Cheque dishonoured: ₹5,000
- Cheques issued not presented: ₹12,000
- Cheques deposited not cleared: ₹8,000
Step 1: Adjusted Cash Book
Balance as per Cash Book 95,000
Add:
Interest credited 1,800
Direct deposit by customer 20,000
--------
1,16,800
Less:
Bank charges 400
Cheque dishonoured 5,000
--------
Adjusted Cash Book Balance 1,11,400
Step 2: Bank Reconciliation Statement
Adjusted Cash Book Balance 1,11,400
Add:
Cheques issued not presented 12,000
--------
1,23,400
Less:
Cheques deposited not cleared 8,000
--------
Balance as per Bank Statement 1,15,400
Example 21: Multi-Currency Business Account
Given: A business with USD account. Cash book shows $45,000. Bank statement shows $47,500.
Differences:
- Wire transfer received: $3,500 (not recorded)
- Bank charges: $150
- Outstanding cheques: $850
Solution:
Balance as per Cash Book $45,000
Add:
Wire transfer received $3,500
---------
$48,500
Less:
Bank charges $150
---------
Adjusted Cash Book Balance $48,350
Add:
Outstanding cheques $850
---------
Balance as per Bank Statement $47,500 ✓
Wait—this doesn't match! Let me recalculate...
Actually, the bank statement shows $47,500, but our calculation yields $49,200. This means there's an unidentified difference of $1,700 that requires investigation. This is exactly what happens in real practice—not every reconciliation balances on the first attempt!
Example 22: GST/TDS Deductions by Bank
Given:
- Cash book balance: ₹1,80,000
- TDS on FD interest: ₹2,500 (deducted by bank, not recorded)
- Interest credited: ₹25,000 (not recorded)
- Cheques issued not presented: ₹35,000
- Cheques in clearing: ₹28,000
Solution:
Balance as per Cash Book 1,80,000
Add:
Interest credited (gross) 25,000
Cheques issued not presented 35,000
--------
2,40,000
Less:
TDS deducted on interest 2,500
Cheques in clearing 28,000
--------
Balance as per Bank Statement 2,09,500
For understanding TDS and tax implications better, professionals can explore our Financial Ratios Guide which covers related financial metrics.
Challenging Examples (23-25): Examination-Style Problems
Example 23: Complete BRS Problem (Exam Pattern)
Given: On 31st December 2025, Sharma Enterprises' cash book showed a debit balance of ₹3,75,600. On comparison with the bank statement, the following discrepancies were noted:
- Cheques deposited but not collected: ₹48,200
- Cheques issued but not presented: ₹62,500
- Bank charges for December: ₹850
- Interest on overdraft: ₹2,400
- Dividend collected by bank: ₹15,000
- A cheque for ₹12,000 deposited was returned dishonoured
- Insurance premium paid by bank (standing instruction): ₹8,500
- A customer deposited ₹35,000 directly into bank account
- A cheque issued for ₹8,750 was wrongly recorded in cash book as ₹7,850
- Bank credited ₹5,000 belonging to another customer (same name)
Prepare: Bank Reconciliation Statement as on 31st December 2025.
Solution:
First, identify what affects cash book vs. what's just timing:
Cash Book Adjustments Needed:
- Bank charges: ₹850 (reduce)
- Interest on overdraft: ₹2,400 (reduce)
- Dividend collected: ₹15,000 (increase)
- Cheque dishonoured: ₹12,000 (reduce)
- Insurance premium: ₹8,500 (reduce)
- Direct deposit: ₹35,000 (increase)
- Recording error: ₹900 (reduce) [8,750 - 7,850 = 900 underrecorded payment]
Timing Differences Only:
- Cheques deposited not collected: ₹48,200
- Cheques issued not presented: ₹62,500
- Wrong credit by bank: ₹5,000 (bank error)
BANK RECONCILIATION STATEMENT
As on 31st December 2025
Particulars Amount (₹)
-------------------------------------------------------------------
Balance as per Cash Book (Dr) 3,75,600
Add:
Cheques issued but not presented 62,500
Dividend collected by bank 15,000
Direct deposit by customer 35,000
----------
4,88,100
Less:
Cheques deposited but not collected 48,200
Bank charges 850
Interest on overdraft 2,400
Cheque dishonoured 12,000
Insurance premium (standing instruction) 8,500
Error in recording cheque (understatement) 900
----------
4,15,250
Add:
Wrong credit by bank (bank error) 5,000
----------
Balance as per Bank Statement 4,20,250
===================================================================
Example 24: BRS When Both Balances Are Given
Given:
- Cash book shows debit balance: ₹52,000
- Bank statement shows credit balance: ₹58,000
- Prepare BRS showing how to reconcile from one to the other
Identify causes:
You need to find items worth ₹6,000 that explain the difference.
Possible scenarios:
- Cheques issued not presented > Cheques deposited not collected by ₹6,000
- Or a combination of timing and recording differences
This type of "work backward" problem tests conceptual understanding thoroughly.
Example 25: Monthly Recurring BRS (Business Scenario)
A small business performs monthly reconciliation. Here's January 2026:
Given:
- Opening cash book balance (1st Jan): ₹2,50,000
- Deposits during month: ₹8,50,000
- Payments during month: ₹7,20,000
- Closing cash book balance (31st Jan): ₹3,80,000
Bank statement shows: ₹3,65,000
Differences identified:
- Deposits in transit (30-31 Jan): ₹28,000
- Outstanding cheques: ₹42,000
- Bank service charges: ₹800
- Interest earned: ₹1,200
- Auto-debit for utilities: ₹2,400
Solution:
Balance as per Cash Book 3,80,000
Add:
Interest earned (not recorded) 1,200
Outstanding cheques 42,000
--------
4,23,200
Less:
Deposits in transit 28,000
Bank charges 800
Utility auto-debit 2,400
Step-by-Step Process: How to Prepare Bank Reconciliation Statement
After working through 50 examples, let me share the systematic approach I've refined over 25 years of practice:
Step 1: Gather Your Documents
- Cash book (bank column) for the reconciliation period
- Bank statement or passbook for the same period
- Previous month's reconciliation (for reference)
Step 2: Compare Opening Balances
If last month's reconciliation was accurate, opening balances should already match (after adjusting for timing items). If they don't, investigate there first.
Step 3: Tick Matching Entries
Go through each entry in your cash book and find the corresponding entry in the bank statement. Tick both when they match. This is methodical but essential.
Step 4: List Unmatched Items
After ticking, you'll have:
- Unticked items in cash book: Deposits/payments not yet reflected in bank
- Unticked items in bank statement: Bank charges, direct credits/debits not yet recorded in your books
Step 5: Categorize the Differences
Classify each unmatched item into:
- Timing differences (will resolve automatically next period)
- Recording errors (need correction in your books)
- Bank errors (need to be reported to bank)
- Unknown items (require investigation)
Step 6: Prepare the BRS
Using either format (starting from cash book balance or bank statement balance), systematically add or subtract items to arrive at the other balance.
Step 7: Verify Your Work
The reconciliation must balance. If it doesn't, recheck your categorizations and arithmetic before proceeding.
Step 8: Make Necessary Journal Entries
Items like bank charges, interest income, direct deposits, and dishonoured cheques need to be recorded in your books. Our Journal Entries Guide with 100+ Examples provides the exact entries for each scenario.
Step 9: Document and File
Retain the BRS along with the bank statement for audit trail purposes. This documentation becomes crucial during statutory audits.
How to Check Bank Reconciliation Statement During Audit
As someone who has conducted hundreds of audits, here's what auditors look for when reviewing BRS:
Audit Verification Steps
- Test the mathematical accuracy of additions and subtractions
- Trace outstanding cheques to subsequent bank statements to confirm clearance
- Verify deposits in transit cleared within a reasonable time frame
- Examine old outstanding items—cheques outstanding for 90+ days are red flags
- Confirm bank charges and interest match bank confirmation letters
- Review journal entries passed for BRS adjustments
Red Flags Auditors Look For
- Cheques outstanding for unusually long periods
- Large reconciling items close to year-end
- Frequent bank errors in the same direction
- Missing or inadequate documentation
- Adjustments made after the audit begins
For professionals pursuing CIA (Certified Internal Auditor) certification, BRS auditing is a critical examination topic.
Frequently Asked Questions (FAQ)
Q1: What is a Bank Reconciliation Statement in simple words?
A Bank Reconciliation Statement is a document that explains why the balance in your accounting records (cash book) differs from the balance shown by the bank (passbook/statement). It identifies timing differences and errors to ensure both records can be reconciled to the same correct figure.
Q2: Why is Bank Reconciliation Statement prepared?
BRS is prepared to:
- Identify and correct errors in cash book or bank records
- Track outstanding cheques and deposits in transit
- Detect unauthorized transactions or potential fraud
- Determine the accurate cash position for business decisions
- Comply with audit and regulatory requirements
Q3: Who prepares the Bank Reconciliation Statement?
The account holder (business, organization, or individual) prepares the BRS. The bank provides the statement; reconciling it with your records is your responsibility. In companies, this task typically falls to the accounts department, with review by a supervisor or internal audit.
Q4: What is the formula for Bank Reconciliation?
Starting from Cash Book Balance:
Bank Statement Balance = Cash Book Balance
+ Cheques Issued Not Presented
+ Direct Credits by Bank
– Cheques Deposited Not Credited
– Bank Charges
– Direct Debits by Bank
Q5: What are the causes of difference between Cash Book and Bank Statement?
The nine main causes are:
- Cheques issued but not yet presented
- Cheques deposited but not yet credited
- Direct deposits by third parties
- Bank charges and fees
- Interest credited by bank
- Interest/penalties charged by bank
- Standing instruction payments
- Dividends/interest collected by bank
- Errors in either record
Q6: How often should Bank Reconciliation be performed?
Best practice is monthly for most businesses. High-transaction businesses may reconcile weekly or daily. At minimum, reconciliation must be completed before preparing financial statements.
Q7: What is meant by "deposits in transit"?
Deposits in transit are cheques or cash deposited into the bank account that have been recorded in the cash book but haven't yet appeared in the bank statement. This typically occurs for deposits made in the last few days of the month.
Q8: What journal entries are required after Bank Reconciliation?
Journal entries are needed for items previously unknown to the business:
- Bank charges: Debit Bank Charges, Credit Bank
- Interest income: Debit Bank, Credit Interest Income
- Dishonoured cheques: Debit Accounts Receivable, Credit Bank
- Direct deposits: Debit Bank, Credit Accounts Receivable/Income
After identifying reconciling items, record the necessary adjustments using the double entry system—debiting one account and crediting another for each adjustment
Conclusion: From ₹47,832 to Mastery—Your Reconciliation Journey Starts Now
I began this guide with a story about spending three days hunting for a ₹47,832 difference in my first year as an articled assistant. That experience—frustrating as it was at the time—shaped my entire approach to bank reconciliation.
Today, I can spot discrepancies in minutes that once took me days. The difference isn't just 25 years of experience; it's having a systematic framework and understanding the "why" behind every entry.
Bank reconciliation isn't glamorous work. You won't see LinkedIn posts celebrating "another successful BRS!" But here's what I've learned: the professionals who master the fundamentals are the ones who build lasting careers.
Every CFO I know can still prepare a bank reconciliation by hand. Every forensic accountant I've worked with considers BRS their first investigative tool. Every audit partner I've met started their career ticking and tying bank statements.
This foundation—understanding where money sits, why records differ, and how to find the truth—underlies everything else in accounting and finance. Master this, and you'll find that financial statement analysis, auditing, and even complex consolidations become more intuitive.
My challenge to you: Don't just read this guide. Work through the examples with pen and paper. Start with Example 1, and don't move forward until you understand why the answer is what it is. By Example 25, you'll have developed an instinct for reconciliation that will serve you for decades.
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- School leaving certificate format
- Letter of experience insurance
- Insurance cancellation letter format
- format for Thank you email after an interview
- application for teaching job
- ACCA PER examples
- Leave application for office
- Marketing manager cover letter
- Nursing job cover letter
- Leave letter to class teacher
- leave letter in hindi for fever
- Leave letter for stomach pain
- Leave application in hindi
- Relieving letter format
Interview questions
Link for blogs for various interview questions with answers
- Strategic interview questions
- Accounts payable interview questions
- IFRS interview questions
- CA Articleship interview questions
- AML and KYC interview questions
- Accounts receivable interview questions
- GST interview questions
- ESG Interview questions
- IFRS 17 interview questions
- Concentric Advisors interview questions
- Questions to ask at the end of an interview
- Business Analyst interview questions
- Interview outfits for women
- Why should we hire you question
leave application format
- Leave application for office
- Leave application for school
- Leave application for sick leave
- Leave application for marriage
- leave application for personal reasons
- Maternity leave application
- Leave application for sister marriage
- Casual leave application
- Leave application for 2 days
- Leave application for urgent work
- Application for sick leave to school
- One day leave application
- Half day leave application
- Leave application for fever
- Privilege leave
- Leave letter to school due to stomach pain
- How to write leave letter
Insurance blogs
- Sample letter of appeal for reconsideration of insurance claims
- How to increase insurance agent productivity
- UAE unemployment insurance
- Insurance cancellation letter
- Insurance claim letter format
- Insured closing letter formats
- ACORD cancellation form
- Provision for insurance claim
- Cricket insurance claim
- Insurance to protect lawsuits for business owners
- Certificate holder insurance
- does homeowners insurance cover mold
- sample letter asking for homeowner right to repair for insurance
- Does homeowners insurance cover roof leaks
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